Inflation and supply chain disruptions are standard news fare these days. But here’s a twist that few anticipated: how inventory and supply problems are making some companies reconsider advertising their wares in the first place.
As the Wall Street Journal reports:
“It’s not wise to drive demand when shelves are bare,” said Susan Cantor, chief executive officer of branding firm Sterling Brands.
Chocolate giant Hershey Co. and household-goods manufacturers Kimberly-Clark Corp. and Church & Dwight Co. in recent days said they cut back on ad and marketing spending in the third quarter because of supply-chain issues.
“The supply-chain challenges just wouldn’t enable us to be able to meet further demand that we would create through our very impactful advertising,” Hershey Co. Chief Executive Michele Buck said on an investor call. “It just didn’t make sense.”
And the rethink is spreading:
Jason Wagenheim, president and chief revenue officer at Bustle Digital Group, which owns publications Gawker, Nylon and W Magazine, said his company is seeing “temporary but significant advertising pauses” from many clients because of severe product shortages across many sectors including cars, diapers, toys, food and consumer electronics.
“I think large media organizations are going to see short term significant impacts in these categories until the supply-chain issues right themselves, which should be early in 2022…”
Not every company is going to cut its ad spending, and to be sure, some will take advantage of their competitors leaving the field.
But here’s a real world economic test of how ads drive sales. Will people change their buying habits? Will sales of certain products fall? Will anyone notice the difference? Or will inflation mean no one can afford to buy stuff, anyway?